Analogue Entitlements in a Digital Age
Preliminary data briefing on income support and the digital divide
Vanessa Musolino and Greg Ogle
June, 2016
“AnalogueEntitlementsin a Digital Age: Preliminary Data Briefing on income support and the digital divide”
Authored by Vanessa Musolinoand Greg Ogle
Edited by: Jeremy Riddle(ACCAN)
Published in 2016
The operation of the Australian Communications Consumer Action Network is made possible by funding provided by the Commonwealth of Australia under section 593 of the Telecommunications Act 1997. This funding is recovered from charges on telecommunications carriers.
South Australian Council of Social Service
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Australian Communications Consumer Action Network
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This work can be cited as: Musolino, V. & Ogle, G. 2016, Analogueentitlementsin adigital age: Preliminary data briefing on income support and the digital divide,Australian Communications Consumer Action Network, Sydney.
Contents
Contents
Introduction
Purpose of the preliminary data briefing
Summary of key findings and recommendation
The Centrelink Telephone Allowance
Key Findings of the Survey
Many low income consumers are struggling with their telecommunications costs
Many low income consumers limit their telecommunications to manage their financial difficultly
The Centrelink Telephone Allowance is not targeted at low income earners who experience the most financial difficulty
Households with dependent children are struggling with telecommunications costs
The Centrelink Telephone Allowance does not provide all recipients with assistance for the internet, an essential telecommunications service for low income consumers.
Key Recommendation: Review and Update the Centrelink Telephone Allowance for the Digital Age
Appendix 1: Centrelink Telephone Allowance Eligibility and Payment Rates
Appendix 2: Survey Methodology and Demographics
References
Introduction
The Australian Communications Consumer Action Network (ACCAN)[1]commissioned the South Australian Council of Social Service (SACOSS)[2]to conduct a joint research project on the affordability of telecommunications for low income consumers. This research project is examining:
- The adequacy of the Centrelink Telephone Allowance (CTA) – the major commonwealth telecommunications concession payment for Australians on low incomes (see below for more detail on the CTA), and
- The suitability and impacts of payment plans, billing and value for money of the telecommunication products used by low-income consumers.
Encouraging the uptake of telecommunications services among low-income consumers by reviewing the CTA will increase digital literacy, generate higher return on the Government’s investment in the NBN as well as better enable the digital transformation of government services. It will also increase savings to government and consumers. Currently 40% of transactions take place using non-digital methods. Deloitte has estimated that if this could be reduced to 20% in ten years’ time, savings to government and citizens would amount to $17.9 billion and $8.7 billion respectively (Deloitte, 2015).
It is inevitable that any examination of the adequacy of a specific allowance such as CTA will also reveal issues about the overall adequacy of the levels of income support payments currently available to individuals and families. That said the purpose of this research is to focus specifically on the CTA.
Purpose of the preliminary data briefing
As part of theproject, SACOSS commissioned Mint Research to conduct a survey of a random sample of 523 low income Centrelink beneficiaries (See Appendix 2 for an outline of the survey methodology and demographics)to exploretheir experiences oftelecommunications,and the adequacy of the CTA to enable affordable access to telecommunications.
We are releasing this data now because the findings from the survey provide a strong evidence base to support recent calls by ACCAN to review and update the CTA to ensure that it reflects the reality of modern communications (ACCAN, 2016).
While a full analysis of the survey data will be made in the final report, we believe that releasing this preliminary data now will make an important contribution to the political debate about the telecommunications experiences of low income consumers and the adequacy of current Centrelink payments.
This briefing:
- outlines the key findings from the Mint Research survey,
- provides high level analysis of the adequacy of the CTA,
- confirms the vital role CTA plays as one element in the current income support payments system,
- recommends thatall political parties commit during the current federal election campaign to review the CTA in light of the survey findings.
Summary of key findingsand recommendation
The Low Income Consumer Survey on Telecommunications and the Centrelink Telephone Allowance (the survey) found that:
- many low income consumers are struggling to pay their telecommunications costs, and
- the Centrelink Telephone Allowance (CTA) is not adequate to alleviate this financial difficulty.
The survey findings highlight the telecommunications exclusion experienced by people on the lowest income support payments – the Newstart and Youth Allowance payments, and low income families with dependent children, confirming the inadequacy of financial assistance to meet basic living costs. It also found that the CTA:
- is not available for low income earners experiencing the most financial difficulty,
- fails to provide all recipients with assistance for the costs of an internet connection, which is anessential telecommunications service for social and economic participation in Australia today, and
- provides inadequate assistance for families with dependent children.
These findings suggestthe CTA is not fit for the purpose of providingall low income Australians with affordable telecommunicationsin the digital age.
1
The Centrelink Telephone Allowance
The Centrelink Telephone Allowance (CTA)is a concession paid to certain Centrelink income support recipients to help with the costs of maintaining a telephone,and for some recipients,a home internet service.
Eligibility for the telephone allowance is assessed by Centrelink at the same time as claims for income support payments and is paid quarterly.
The value of the CTA has also been included in the Pension Supplement which is paid fortnightly to a range of pensioners including those on the Age and Disability Pension (over 21 years old and without children) and Carers Payment recipients.
The CTA was first introduced in 1992 before the internet was widely used and according to the Centrelink Guide to Australian Government Payments is provided to assist recipients “with the cost of maintaining a telephone service—it is notpaid to assist with the cost of telephone calls” (2016). Importantly, it only provides support for the internet for people who receive the Pension Supplement or the Disability Support Pension and are aged under 21 years old and have no dependent children.
As SACOSS has noted, the current design of the CTA rests on:
“an apparent notion that telecommunications are only essential where there are children or someone with disability – basically a view of emergency rather than essential services. This not only excludes some of the poorest in our community who might need phone and internet services (for instance, for job seeking or other support services) … this ‘emergency service’ model fails to understand or address the increased importance of telecommunications to all aspects of life in a modern society.” (SACOSS, 2015)
See Appendix 1 for a full outline of the CTA eligibility criteria and payment rates.
Key Findings of the Survey
Many low income consumers are struggling with their telecommunications costs
Overall,62%ofrespondentsreportedexperiencingeither difficultypaying, havingtocutback,orhaving to stop usingoneormoretelecommunications services for financial reasons in the last 12 months. When broken down according to telecommunications service and cost type, half of respondents are experiencing difficulty paying their ongoing phone (50%) and internet (49%) costs, while around one in ten are experiencing difficulty paying their upfront[3] phone (12%) and internet (18%) costs(SeeFigure 1).
(Source: Mint Research, 2016)
The survey indicates that over half of current Centrelink beneficiaries are struggling to afford to use their telecommunications services. This suggests that many low income consumers may require additional support to use their telecommunications services.
Many low income consumers limit their telecommunicationsto manage their financial difficultly
When asked specifically about each telecommunications service they use, around half of respondents usually, always or sometimes limit their use of a mobile phone (53% for phone without data, 48% for phone with data), while just under half limit their use of a landline phone (43%) and the internet (41%). The majority of respondents cite financial reasons for limiting their use oftelecommunications (90% for phone without data, 87% for phone with data, 78% for landline phone, 68% for internet users) (See Figure 2).
(Source: Mint Research, 2016)
The survey indicates that many low income consumers are limiting their telecommunications usage to manage their telecommunications costs. While this might be a sound coping strategy for low income consumers to manage their financial pressures, it mayalso risk many low income consumers missing out on participating in normal social and economic activities. (See below for outline of essential activities that are commonly undertaken using telecommunications). This is particularly significant for the internet, where in today’s Australia “teachers assume their students have unrestricted access to the internet and set homework accordingly; businesses assume their customers are internet users and shape their offerings online; and governments shift resources to digital provision of information and opportunities to interact” (Ewing, 2016).Limiting the use of telecommunications may place low income consumers on the wrong side of the digital divide, and risk them becoming further disadvantaged and socially excluded(ACOSS, 2016; Ewing, 2016; Walton et al, 2013). The survey suggests that many low income consumers may require additional support to use their telecommunications services to participate in essential social and economic activities on par with the wider Australian community.
The Centrelink Telephone Allowance is not targeted at low income earners who experience the most financial difficulty
When looking at overall difficulty paying, cutting back and stopping for financial reasons by Centrelink payment type, recipients of Youth Allowance(81%), Newstart Allowance(73%) and Parenting Payment(72%) are experiencing the most financial difficulty, while recipients of the Age Pension (31%) are experiencing the leastby a significant margin (See Figure 3).
(Source: Mint Research, 2016)
When financial difficulty is broken down by upfront and ongoing costs for both internet and phone connections, recipients of Newstart Allowance, Youth Allowance and Parenting Payment are again experiencing significantly more difficulty than recipients of the Age Pension (See Table 1).
Table 1: Respondents reporting difficulty paying by cost type
Percent of Respondents Reporting Difficulty PayingPayment Type / Newstart Allowance / Youth Allowance / Parenting Payment / Age Pension
Phone – UpfrontCosts / 13% / 8% / 20% / 4%
Phone – OngoingCosts / 61% / 63% / 65% / 26%
Internet – UpfrontCosts / 20% / 13% / 22% / 4%
Internet – Ongoing Costs / 63% / 53% / 63% / 21%
(Source: Mint Research, 2016)
Similarly,those on Youth Allowance, Parenting Payment and Newstart Allowance are around twice as likely to limit their telephone and internet usage than those on the Age Pension (See Figure 4).
(Source: Mint Research, 2016)
The survey indicates that recipients of Newstart Allowance, Youth Allowance and Parenting Payment are experiencing far greater financial difficulty with their telecommunications costs than Age Pension recipients.
The latest ACOSS Poverty in Australia report shows that 55% of people relying on the Newstart Allowance or unemployment payment are living in poverty and 50.6% of those on Youth Allowance. The same research tells us that the maximum rate of many social security payments is less than the poverty line – by $97 a week for Newstart and $193 a week for Youth Allowance on 2014 figures. The Newstart Allowance is currently $38 a day and has not been increased in real terms since 1994. People on these allowances also currently receive about $170 a week less than those receiving pension payments and have more limited access to the CTA.
While all Aged Pensioners receive the CTA through the Pension Supplement, and all Parenting Payment (Single) recipients through the standalone CTA, only a highly restricted number of recipients of Newstart Allowance, Youth Allowance and Parenting Payment (Partnered) are eligible for the CTA (See appendix 1 for full outline of CTA eligibility). This is despite Newstart Allowance and Youth Allowance beneficiaries receiving a lower base level of income support compared to Age Pension beneficiaries who receive the highest base level of incomesupport (See Table 2).
Age Pensioners are also more likely to own and live in their own home, thereby tending to have lower housing costs than Newstart and Youth Allowance recipients who tend to have high rent and mortgage repayment costs. Older Australians are also less likely to use mobile phones and the internet, and are likely to use these services less often than other Australians, meaning they potentially do not face as many affordability issues (ACMA, 2013),
This suggests that the CTAis not currently reachingthose with the highest financial need and thoseexperiencing the most financial difficulty with their telecommunications costs.
Table 2: CTA recipients payment type and level
Payment type / Payment levelCTA via Pension Supplement /
- Age Pension
- Disability Support Pension (age over 21 or have dependent children).
Standalone CTA /
- Parenting Payment
- Newstart Allowance (over 60 or single principle carer of dependent children or partial capacity to work)
- Youth Allowance (single principle carer of dependent children or partial capacity to work)
$570/FN(Single, children)
$567/FN(Single, children)
No CTA /
- Newstart and Youth Allowance (under 60, without dependent children and a full capacity to work or study)
$433/FN(YA Single away from home)
(Source: Mint Research, 2016)
Households with dependent children are struggling with telecommunications costs
Households with dependent children are experiencing high rates of financial difficulty with their ongoing telecommunications costs, and regularly limiting their use of telecommunications(See Table 3).
Table 3: Respondents reporting difficulty paying or limiting by cost type
Percent of Respondents Reporting Difficulty Paying or Limiting useHousehold Type / Single with children / Partnered with children
All Telecommunication costs / 71% / 69%
Phone – Ongoing Costs / 62% / 59%
Phone – Limiting / 62% / 68%
Internet – Ongoing Costs / 65% / 58%
Internet – Limiting / 52% / 57%
(Source: Mint Research, 2016)
The survey indicates that households with dependent children are struggling to pay their regular telecommunication bills and are also limiting their usage. This is despite Centrelink income support recipients with dependent children generally being eligible for the CTA. This suggeststhe CTA is not adequate for recipients withdependent children.
The Centrelink Telephone Allowance does not provide all recipients with assistance for the internet, an essential telecommunications service for low income consumers.
Most low income consumers are connected to at least one type of telephone(61% with data and calls, 30% with calls only, 64% withlandline telephone)as well as an internet service (92%).Just over half of all households are connected to all threeservices (52%).
Many respondents reported using the internet to undertake essential social and economic activities, including looking for employment (83%),looking for housing (71%), accessing government services (68%), accessing other services (61%) and completing education activities (59%) (See Figure 5)
(Source: Mint Research, 2016)
The survey indicates that the internet is used bythe majority of low income consumers, commonly for essential social and economic activities, including significantly for this cohort – access to government services such as Centrelink, looking for employment and completing educational activities. Other studies have established that the mobile phone and internet are now considered the most essential telecommunication services(Saunders and Wong, 2012).
However, current payments do not make adequate provision for the costs of accessing the internet. For example, the CTA does not provide all recipients with assistance with the costs of an internet connection. In fact,this isonly available to those who receive it as part of the Pension Supplement or thoserecipients of the Disability Support Pensionwho areunder 21 years old and have no children. Therefore the CTA should be revised as it fails to provide all recipients with assistance for the costs of an internet connection, one of today’s most essential telecommunications services.
Key Recommendation: Review and Update the Centrelink Telephone Allowance for the Digital Age
Thekey findings from the Low Income Consumer Survey on Telecommunications and the Centrelink Telephone Allowance suggest that the CTA is not fit for the purpose of providing all low income Australians with affordable telecommunications in the digital age. Specifically the CTA:
- is not available for low income earners experiencing the most financial difficulty,
- fails to provide all recipients with assistance for the costs of an internet connection, which is an essential telecommunications service for social and economic participation in Australia today, and
- provides inadequate assistance for families with dependent children.
In the coming months ACCAN and SACOSS will provide afinal reporton the affordability research project of which this survey is one important element.The report will provide a full set of reform options for how the CTA could be updated to ensure that it supports all low income Australians to access affordable telecommunications in the digital age.